DEFENSE LOGISTICS AGENCY

HEADQUARTERS

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

October 22, 2015

MEMORANDUM FOR DISTRIBUTION

SUBJECT: Defense Logistics Management Standards (DLMS) Joint Finance and Supply Process

Review Committee (PRC) Meeting of October 8, 2015

The attached minutes of the DLMS Joint Finance and Supply PRC meeting are forwarded 

for information and action.

The Defense Logistics Management Standards Office (DLMSO) points of contact are Mr. 

Robert Hammond, Finance PRC Chair, email: financehq@dla.mil, Ms. Ellen Hilert, Supply PRC 

Co-Chair, email: ellen.hilert@dla.mil, Ms. Heidi Daverede, Supply PRC Co-Chair, email: 

heidi.daverede@dla.mil.

 

DONALD C. PIPP

Director,

Defense Logistics Management

Standards Office

Attachment:

As stated

cc: 

ODASD(SCI)

Finance and Supply PRC members

Meeting attendees
Attachment

Page 1

DEFENSE LOGISTICS AGENCY 

HEADQUARTERS

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

October 22, 2015

MEMORANDUM FOR RECORD

SUBJECT: Defense Logistics Management Standards (DLMS) Joint Finance and Supply Process

Review Committee (PRC) Meeting of October 8, 2015

Purpose: Defense Logistics Management Standards Office (DLMSO) hosted a Joint

Finance and Supply PRC meeting at DLA Headquarters and via Defense Collaboration Services 

(DCS). The focus of the meeting was to review with the finance and supply communities,

opportunities to develop DoD enterprise approaches to address known gaps in audit evidentiary 

matter where orders originate outside the Component ordering systems. A listing of

participitants and all meeting related materials and briefings are hyperlinked below and are 

available on the Finance PRC Web page linked to the meeting agenda at http://www.dla.mil/j6/dlmso/Archives/archives_fin.asp.

Brief Summary of Discussion: Mr. Robert Hammond (Finance PRC Chair) and Ms. 

Ellen Hilert (Supply PRC Co-Chair) facilitated meeting discussion.

1. Welcome and Opening Comments. Mr. Hammond, Ms. Hilert and Mr. Donald Pipp, 

Director of DLMSO, extended their sincere appreciation to all meeting participants. Over a 

hundred individuals or groups participated in the meeting, primarily by DCS. Mr. Hammond 

addressed DLMSO’s mission as the Executive Agent for the logistics information exchange,

fostering interoperability and facilitating continuous enterprise integration process improvements

to logistics management and operations. A graphic depicted the annual volume of logistics 

transactions flowing between customers and suppliers. Mr. Hammond described the structured, 

disciplined DLMS change process. He discussed the Finance and Supply Process Review 

Committee (PRC) missions, identified Web links for the Finance, Supply, DoDAAD and other 

PRCs and chartered DLMS working group points of contact, and location of DLMS training on 

the Web.

2. The Art of Logistics Video. The video is hyperlinked here and on the agenda. Mr. 

Hammond recommended those new to the DLMS watch this DLA-produced video to get a brief 

introduction on the history and role of the DLMS. Participants are welcome to refer others to the 

video.

3. Orders Initiated Outside of Component Systems. Mr. Hammond provided a recap of the 

common supply process/transaction flow from requisition through to Interfund billing, and

billing adjustment. The requisition, materiel receipt acknowledgement and interfund bill provide 
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the evidentiary matter to support an audit three way match for the buyer and seller. Component 

ordering systems route the transactions through the Defense Automatic Addressing System 

(DAAS), which manages data transformations between trading partner capabilities, applies 

specific data validations, and maintains a record of transactions. An additional benefit to the 

trading partners is that Transaction Services, which manages DAAS, hosts Web tools for 

querying and viewing raw transaction data that are available to individuals with approved system 

access requests. Moreover, transactions routed through DAAS are a key source of evidentiary 

matter, in lieu of emails, spreadsheets and paper documents. Mr. Hammond walked through a 

couple of the tools for researching requisition and billing related transaction data.

When orders are not originated in a Component's ordering system, obligations may not be 

recorded at the line item level, orders may not process through DAAS for validation/editing, the 

automated supply transactions that serve as the evidentiary matter for audit are routinely 

suppressed (as they may not provide line item information to their customer even when available 

in the ordering system), receipts may not be recorded in the Component’s supply system and 

materiel receipt acknowledgements may be problematic. In these instances, billing offices "roll 

up" Interfund detail bills, using a single detail bill with a quantity of one each, an invalid 

NSN/part number and a unit price representing the total value of the items included in the bill. 

Such bills do not identify what is being billed, and the same invalid part NSN/part number with a 

quantity of one each is used with a different unit price for similar bills. This practice is not in 

compliance with policy, results in extensive, costly manual labor to perform a three way match 

between the obligation/order, receipt and bill and is a serious audit readiness issue for 

Components that has Senior Executive Service (SES) level interest. Not surprisingly, a recent 

GAO audit (GAO-15-198) of the USMC 2012 schedule of budgetary activity notes “departmentwide material weakness with DLA business systems/processes with resulting inability [of 

Components] to provide evidentiary matter related to obligations, orders, receiving reports and 

invoices.” Note, however, that this applies to all sellers and is not unique to DLA. The other 

presentations on the PRC agenda examine opportunities to leverage and enhance existing 

solutions to close the gap in auditable evidentiary matter for these ordering processes/systems, 

and seek verification of interest and requirements for two potential solutions that would need 

proposed DLMS changes (PDCs) for a DoD enterprise approach. The intent is not for all the 

ordering processes where the order is initiated outside the Service’s supply system to agree on 

one approach, but to help each process identify an approach that will work best for their 

situation. Still, for all the processes targeting a similar approach, the solution should be a 

common standard meeting the process needs that is compliant with MILS/DLMS.

4. Relationship between Requisition Status and Obligations. Ms. Hilert noted where 

supply status transactions should affect a Component’s obligations and opportunities for 

enhancements. Military Standard Requisitioning and Issue Procedures (MILSTRIP) requires 

that sources of supply (SoS) furnish status data to designated activities as notice of action 

taken or being taken on MILSTRIP transactions. Some status codes explicitly instruct on 

obligation changes, while others may impact obligations even though the code does not call 

out such action (e.g. Status Code B7, Unit price change). Receipt of a supply status

transaction at the bill-to activity indicating materiel is being released for shipment represents

an opportunity to interact with financial processes/systems to confirm that the appropriate 

obligation is recorded. For the obligation information to be posted correctly, the supply status 

transaction must include at a minimum; materiel identification, billing unit price, fund code, 
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ordering activity, and the bill-to party. Materiel identification without an NSN or CAGE/Part 

Number can be problematic. DLMS has support for other forms of product identifications, but 

may need to require inclusion of product nomenclature where no standard identification is 

available. Ms. Hilert explained that DAAS will no longer suppress the supply and shipment 

status transactions associated with FEDMALL requisitioning with Government purchase card 

payment method, but DLMSO has provided rules for avoiding over obligating funds based on 

the supply status by checking for a specific bill-to party DoDAAC. She drew attention to the 

MILSTRIP requirement that all internet ordering applications that permit MILSTRIP 

requisitions to be initiated outside the responsible DoD Component’s supply system take 

precautions to ensure that only authorized personnel place orders and all standard financial and 

logistics procedures are followed. At the moment, these applications must either establish an 

interface to the appropriate Component-sponsored application to validate funds availability 

and establish the obligation, or make it clear to users of their responsibility to manually 

establish the obligation prior to or concurrent with placing the order. Ms. Hilert requested 

feedback on a possible mandatory requirement for DAAS to furnish supply status to the bill-to 

DoDAAC, and interest in using the shipment status to ensure an obligation is recorded (based 

on DLMS enhancements which allow inclusion of key data missing from legacy shipment 

status). DLA Troop Support commented that the Subsistence Total Ordering and Receipt 

System (STORES) is not providing status transactions due to the turn-around time and 

uncertainty of delivery. Recording obligations at the line item level in Component systems 

may be problematic for orders originated in STORES. Similarly, Defense Medical Logistics 

Supply System (DMLLS)/Theater Enterprise-Wide Logistics System (TEWLS) does not 

currently use supply transactions; instead, they use procurement transactions that DLA’s 

Enterprise Business System (EBS) can process. DLMSO notes that, along with the required 

document number, additional data content may be added to DLMS transactions to support 

procurement requirements.

Actions:

 Components: Review internal procedures to ensure appropriate financial actions are 

taking place based upon Supply Status. (Target Due Date: November 20, 2015)

 Components: Provide preliminary feedback on potential enhancements for mandatory 

supply status to the bill-to activity and use of shipment status for financial system 

interface. (Target Due Date: November 20, 2015)

 Components sponsoring Internet ordering systems:

o Post notice to users for manual posting of obligations pending development of 

appropriate system interfaces or other systemic alternatives

o Ensure system provides supply and shipment status

(Target Due Date: November 20, 2015)

 Components: Confirm systems recognize bill-to party when identified via third party 

billing (Signal Code C or L). (Target Due Date: November 20, 2015)

5. Funds Verification/Obligation Recording Process. Mr. Hammond briefed the Funds 

Control and Verification Process documented in DLM 4000.25, Volume 4, Chapter 7. When 

implemented in Component ERPs , this process and its associated standard XML transactions 
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supports any “off-line” requisitioning system to verify with the Component the requisitioner’s 

authority to place the desired order, ensure sufficient funds are available, establish due-ins

(where supply and finance system are integrated), and accurately document the obligation 

before the requisitioning system completes processing the order. This approach is in place as 

a standard DLA Transaction Services’ Web service between GSA Advantage and Army’s 

Global Combat Supply System – Army (GCSS-Army). A legacy point-to-point interface in 

place with Army’s Funds Control Module (FCM) will eventually be sunset as activities 

migrate from FCM to GCSS-Army. In February 2016, when FEDMALL goes live, the Funds 

Control and Verification Process will be supported. Also, when FEDMALL is stood up, 

Marine Corps will be the next Service to implement the Funds Control and Verification 

Process between FEDMALL and SABRS. The Funds Control and Verification Process is 

available to others to implement, and could be a solution for other off-line processes lacking 

upfront funds verification and obligation recording.

6. DLMS 821 Obligation Transaction. Mr. Hammond gave a brief overview of a concept to 

for creating a new DLMS implementation convention based on the Accredited Standards 

Committee (ASC) X12 821 transaction set, which would allow offline ordering systems to 

provide their customers with information to record obligations at the line item level. Such 

obligations are needed to clear automated Interfund bills at the line item level. Some processes 

where DLA provides obligation data to Components include point-to-point user defined files 

(UDF) supporting DLA Fuels and the KYLOC process for uniforms. However, the UDF 

obligation transactions vary among process and customers, as well as failing to leverage DoD 

standard logistics transaction infrastructure and capabilities provided through DAAS. DLMSO, 

DLA, DFAS, the Defense Enterprise Accounting and Management System (DEAMS) Program 

Management Office (PMO) and Transaction Services are working on a new ASC X12-based 

DLMS 821 Financial Reporting IC for reporting obligations via DAAS to fill the void. The ASC

X12 821 transaction set is used in other DOD processes (i.e. Defense Travel System, credit 

card), but not DLMS. Upon confirmation of Component interest in moving forward with this 

approach, a PDC will be developed and staffed to propose establishing the DLMS 821 and 

associated procedures. As part of these minutes, DLMSO is providing suggested minimum data 

elements for Component review and consideration (Click here to download Excel spreadsheet).

Actions:

 Components report:

1. Need for and interest in DLMS 821 obligation transaction

2. Potential target business processes

3. How default obligation data would be provided to the seller

4. Need to incorporate and map to current KYLOC and Fuels UDFs

5. Minimum data elements required (SFIS/SLOA should be primary)

(Target Due Date: #1-4 – November 20, 2015; #5 – December 4, 2015)

 Sellers: Review Component responses and comment on desirability/feasibility and 

preferred approach for your offline ordering processes (Target Due Date: December

18, 2015)

 DLMSO: In coordination with DLA, draft PDC as required (Target Due Date: TBD

based on feedback)
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7. DLA Prime Vendor MIPR Replacement. Ms. Elaine Applegate, DLA Order 

Management, presented some of DLA’s Prime Vendor programs providing tailored logistics 

support and long term contracts which have millions of dollars in annual Military 

Interdepartmental Purchase Requests (MIPRs). The generic process for these programs shares a 

number of pain points for potential delays and risks for errors related to MIPRs and does not 

consistently make use of Materiel Receipt Acknowledgements (MRAs). DLA identified three 

audit concerns with the Prime Vendor programs to tackle and established corrective goals for 

each. First, to address the delays and errors inherent with MIPRs, DLA is seeking to eliminate 

MIPRs to the fullest extent possible. Second, there is a lack of consistent use of MRAs, which 

DLA seeks to turn into a 99% MRA rate. Lastly, to improve asset visibility and accountability, 

DLA wants to provide customers with better item identification of non-NSN materiel. DLA has 

initiated conversations with the Army about a possible approach which would use a modified 

511R to include requirements common on commercial EDI transactions, and might be able to

pull these processes into the regular supply processes with supply status transactions through to a 

DLMS 810L bill. Meanwhile, DLA Information Operations is exploring a potential SAP 

solution for TVR/ non-NSN and MIPRs. From an audit perspective, the approach of adding 

additional data content to the DLMS 511R has the advantages of the order being originated 

within the Component’s ordering system and of the line item obligations being recorded prior to 

the order being processed. The approach will require trading partners being DLMS capable. 

DLA is also looking at using the Fuels interface for the Air Force DEAMS non-NSN business 

funded by MIPRs. DLA is planning to proactively meet face to face with each Service to 

develop a transition strategy from MIPRs to MILS/DLMS. DLMSO suggests that DLA include 

in these discussions the trading partner SPRC and FPRC representatives, (who have significant 

functional expertise) and that uniform strategies be applied to each business process.

Actions:

 DLA: Consider including SPRC and FPRC representatives in discussions regarding 

transition strategies from MIPRs to MILS. Coordinate with DLMSO, as appropriate, to 

ensure compliant strategies and to develop Proposed DLMS Change Requests as needed

Provide status regarding this outreach initiative to DLMSO.

(Target Due Date: As appropriate and NLT 20 December 2015)

8. Discussion of Seller Identified Systems/Processes for Ordering Outside Component 

Ordering System. Prior to the meeting DLMSO, sought information from ordering 

systems/processes regarding their current capabilities to provide DLMS transactions to support

audit evidentiary matter. Ms. Applegate coordinated data collection for a number of DLA 

ordering systems. GSA, provided information for GSA’s off-line ordering systems/process. 

(The responses are included in the Excel spreadsheet of minimum obligation data elements 

analysis linked to at the end of paragraph six above.) Some process/systems owners commented 

on their process and capabilities.

a. DLA Troop Support Medical Tailored Vendor Relationship (TVR). A 

consideration for this program to providing upfront validation is the number of different 

ways they accept orders.
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b. DLA Troop Support, Construction & Equipment TVR. Noted that they process a 

significant number of unique item orders. The customer emails the requirements to 

DLA, who then seeks quotes from vendors.

c. DLA Land and Maritime Industrial Product-Support Vendor. Currently, the 

customer only gets a summary level bill. The process recognizes the need for a detailed 

line-item obligation to match to a detailed bill.

d. DLA Customer Interaction Center. This emergency requisition process supports 

call-ins and bearer walk-throughs. A post-post requisition is issued at the time of the 

materiel release. DLA Aviation reported that they are having an issue with invalid 

DoDAACs being used by some requisitioners, and would like to see upfront 

verification of the authority code implemented. DLMSO concurs and notes that this 

condition is not unique to bearer walk-through, but applies to any process where orders 

are originated outside of the Component’s ordering system. Many of these processes, 

such as the DLA VILkey process for fuel, rely on customer master data maintained in 

the seller’s system, and the DoDAAC authority codes may change over time. Mr. 

Hammond noted that, while such orders to not pass through DAAS for validation, all 

Intertfund bills do. The resultant Interfund bills fail DAAS edits if the requisitioner 

DoDAAC did not have the authority to place the order, if the bill-to party DoDAAC did

not have the authority to pay the bill or if either DoDAADs is not valid. These results in

journal vouchers by the seller to reverse revenue already recorded, in unmatched 

financial transactions for the buyer and in costly, manual work to reprocess the bills. 

DLMSO noted that, while validations of requisitions routed through DAAS prevents 

those orders from processing, both buyers and sellers have a shared responsibility for 

ensuring - in all ordering processes - that DoDAACs are valid and have the proper 

authority codes for their intended use. DLMSO also noted that DLA has provided 

DLMSO draft PDC 1186, Implementation of Authority Code Edits in Supply Systems,

to require an authority code edit up front in all ordering processes, which is under 

internal review prior to formal coordination with the Supply and Finance PRCs. In a 

related matter, recently released ADC 1043E requires that the fund code similarly be 

validated up front at DAAS and in all ordering processes.

e. GSA Offline Services. GSA discussed it’s self-service stores where line item 

obligations may be problematic. GSA described a processes for USMC in which the

requisitioner uses a ServMart credit card and obligations are sent to SABRS using a 

custom B7A for non-catalog/non-standard transaction. Bills go out twice a month. 

DLMSO noted that B7A is the transaction identifier for another process and there 

should be a DoD standard transaction or process developed instead.

9. Concluding Remarks. Mr. Hammond and Ms. Hilert thanked all meeting participants for 

their time and consideration of the approaches.
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ROBERT HAMMOND ELLEN HILERT

Chair, DOD Finance PRC Co-Chair, DOD Supply PRC

Approved: _______ 

DONALD C. PIPP

Director,

Defense Logistics Management 

Standards Office